Insurance companies risk being caught up in the regulatory crackdown caused by
the rash of recent banking scandals, according to Richard Ward, chief
executive of Lloyd’s of London.

Mr Ward said insurers were struggling with the “fallout” from moves by regulators to put in place rules to prevent new scandals.

“You have the Libor scandal, all the stuff with Standard [Chartered] in the US – that doesn’t help restore the image of financial services in the eyes of the public, the politicians and regulators,” Mr Ward told Reuters.

He said: “We are always having to deal with the fallout of the actions of others and the regulators responding accordingly.”

The banking industry has been hit by several scandals this year, including allegations that banks manipulated Libor, mis-sold complex interest rate derivatives to small businesses, and most recently over money laundering.

In July, Barclays paid fines totalling £290m after it became the first bank to admit it had attempted to manipulate Libor, while Standard Chartered last month paid $340m (£213m) to settle with the New York authorities over claims it broke US sanctions with Iran.

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The Libor scandal has already led to several reviews, with Martin Wheatley, head of financial conduct at the Financial Services Authority, looking at ways to improve how it is set. In additional a parliamentary commission has been established to look at standards in the banking industry.

However, Angela Knight, former chief executive of the British Bankers’ Association (BBA), reportedly warned as early as April 2008 that the lobby group was unable to manage the Libor-setting process.

According to the Wall Street Journal, Ms Knight told Bank of England officials that Libor has become too big for the BBA to continue to manage. The BBA declined to comment.

Mr Ward said that given the scandals it was unsurprising that scrutiny of the financial services industry had increased when “there are people doing things which are wrong”.

However, he said the move to put stricter regulation on insurers was unfair.

“The 2008 financial crisis was not an insurance crisis, it was a banking crisis. All the regulatory changes we’ve experienced in the UK have been driven by the banking crisis,” he said.

Mr Ward also warned that moves by international regulators to include large insurance groups in the same category as global banks that pose a risk to the financial system were misguided.

He added: “Any business that just undertakes insurance should not get on to any list of systemically important financial institutions.”